The Social Security Act requires the Secretary of Health and
Human Services, when he "finds that more or less than the correct
amount" of "payment" has been made under the Old-Age, Survivors and
Disability Insurance program, or of "benefits" has been paid under
the Supplemental Security Income program, to make "proper
adjustment or recovery." If less than the correct amount has been
paid, the Secretary shall pay the balance due; if more than the
correct amount has been paid, the Secretary shall reduce future
payment or obtain a refund from the beneficiary. The Act prohibits,
however, "adjustment of payments to, or recovery . . . from, any
person who is without fault," if such adjustment or recovery would
defeat the Act's purposes or be against equity and good conscience.
Califano v. Yamasaki, 442 U. S. 682,
442 U. S. 697,
interpreted that limitation as entitling the beneficiary to an oral
hearing on waiver of recoupment. Pursuant to his authority to
"fin[d] [whether] more or less than the correct amount" of payment
has been made, and under his general rulemaking authority, the
Secretary promulgated "netting" regulations. Under these
regulations, the Secretary calculates the difference between the
amount due and the amount paid for the period beginning with the
first month for which there was a payment error and ending with the
month of the "initial determination." If the beneficiary was
overpaid in certain months and underpaid in others, the Secretary
will net the errors (
i.e., calculate the difference
between the underpayments and the overpayments) and treat the
netted amount as an overpayment or underpayment, as the case may
be, for purposes of adjustment or recovery. In this case, after the
Secretary made both underpayments and overpayments to each
respondent, he netted the errors, paid the net underpayments, and
offered recoupment waiver hearings as to the net overpayments. The
District Court granted summary judgment to respondents in their
ensuing lawsuit, ruling that the regulations violated the Act. The
Court of Appeals affirmed.
Held: The netting regulations are facially valid. Pp.
494 U. S.
88-95.
(a) The regulations are based on a permissible construction of
the Act. The Act authorizes the Secretary to determine whether
"more or less than the correct amount" has been paid; and the
"correct amount" can
Page 494 U. S. 84
reasonably be construed to mean the net amount owing as of the
date of the determination, rather than the amount owing each month.
The Act refers to the correct amount "of payment," not of "any
payment" (as it does elsewhere), which suggests computation on a
multipayment basis. Nor does the restriction on "adjustment or
recovery" of overpayments foreclose the netting regulations. These
terms do not necessarily embrace all collection methods. The
Secretary has reasonably interpreted "adjustment" to mean a
reduction in future payments, and "recovery" to mean refund. Pp.
494 U. S.
89-93.
(b) The method of computing the netting period does not make the
regulations arbitrary and capricious. The inevitable delay between
the discovery that something is amiss and the formal "initial
determination" of error (which closes the netting period) is
necessary to avoid spur-of-the-moment decisions. The Secretary's
regulations limit delay, and the hypothesis that the Secretary will
deliberately delay to net-in additional underpayments is
implausible. The respondents' alternative regime of separate
accounting would increase the administrative burden, and their
alternative suggestion of delayed reimbursement of underpayments
does not address the alleged delay problem. Pp.
494 U. S.
93-95.
853 F.2d 1532, (CA10 1988) reversed and remanded.
SCALIA, J., delivered the opinion of the Court, in which
REHNQUIST, C.J., and WHITE, BLACKMUN, and O'CONNOR, JJ., joined.
STEVENS, J., filed a dissenting opinion, in which BRENNAN,
MARSHALL, and KENNEDY, JJ., joined,,
post, p.
494 U. S.
96.
Justice SCALIA delivered the opinion of the Court.
If the Secretary of Health and Human Services determines that a
beneficiary has received "more or less than the correct
Page 494 U. S. 85
amount of payment," the Social Security Act requires him to
effect "proper adjustment or recovery," subject to certain
restrictions in the case of overpayments. This case requires us to
decide whether the Secretary's so-called "netting" regulations,
under which he calculates the difference between past underpayments
and past overpayments, are merely a permissible method of
determining whether "more or less than the correct amount of
payment" was made, or are instead, as to netted-out overpayments,
an "adjustment or recovery" that must comply with procedures for
recovery of overpayments imposed by the Act.
I
Two statutory benefit programs established by the Social
Security Act (Act) are involved: the Old-Age, Survivors, and
Disability Insurance program (OASDI), 53 Stat. 1362, as amended, 42
U.S.C. § 401
et seq. (1982 ed. and Supp. IV), and the
Supplemental Security Income program (SSI), 86 Stat. 1465, 42
U.S.C. § 1381
et seq. (1982 ed. and Supp. IV). Millions of
Americans receive benefits under these programs; inevitably, some
beneficiaries occasionally receive more than their entitlement, and
others less. The OASDI program provides the following procedure for
correcting such errors:
"Whenever the Secretary finds that more or less than the correct
amount of payment has been made to any person under this
subchapter, proper adjustment or recovery shall be made, under
regulations prescribed by the Secretary, as follows:"
"(A) With respect to payment to a person of more than the
correct amount, the Secretary shall decrease any payment under this
subchapter to which such overpaid
Page 494 U. S. 86
person is entitled, or shall require such overpaid person or his
estate to refund the amount in excess of the correct amount, or
shall decrease any payment under this subchapter payable to his
estate or to any other person on the basis of the wages and
self-employment income which were the basis of the payments to such
overpaid person, or shall apply any combination of the foregoing. .
. . "
"(B) With respect to payment to a person of less than the
correct amount, the Secretary shall make payment of the balance of
the amount due such underpaid person. . . ."
Act § 204(a)(1)(A), (B); 42 U.S.C. § 404(a)(1)(A), (B) (1982
ed., Supp. IV). As to overpayments, the Act provides:
"In any case in which more than the correct amount of payment
has been made, there shall be no adjustment of payments to, or
recovery by the United States from, any person who is without fault
if such adjustment or recovery would defeat the purpose of this
subchapter or would be against equity and good conscience."
Act § 204(b); 42 U.S.C. § 404(b) (1982 ed.). The provisions
regulating payment errors in the SSI program are substantially
similar.**
Califano v. Yamasaki, 442 U.
S. 682,
442 U. S. 697
(1979), held that the limitation on adjustment or recovery of
overpayments imposed by § 204(b) of the Act
Page 494 U. S. 87
gives recipients the right to an oral hearing at which they may
attempt to convince the Secretary to waive recoupment.
In the provisions set forth above, the Act contemplates that the
Secretary will "fin[d] [whether] more or less than the correct
amount" of payment has been made. Elsewhere, it confers upon the
Secretary general authority to
"make rules and regulations and to establish procedures, not
inconsistent with the provisions of this subchapter, which are
necessary or appropriate to carry out such provisions,"
Act § 205(a), 42 U.S.C. § 405(a) (1982 ed.);
see also
Act § 1631(d)(1), 42 U.S.C. § 1383(d)(1) (1982 ed., Supp. IV)
(SSI). Pursuant to that authority, the Secretary promulgated the
regulations at issue here. The SSI regulation provides:
"The amount of an underpayment or overpayment is the difference
between the amount paid to a recipient and the amount of payment
actually due such recipient for a given period. An overpayment or
underpayment period begins with the first month for which there is
a difference between the amount paid and the amount actually due
for that month. The period ends with the month the initial
determination of overpayment or underpayment is made."
20 CFR § 416.538 (1989). The OASDI regulation unhelpfully
provides that
"[t]he amount of an overpayment or underpayment is the
difference between the amount paid to the beneficiary and the
amount of the payment to which the beneficiary was actually
entitled,"
20 CFR § 404.504 (1989), but the Secretary has interpreted this
as embodying the methodology set forth in the SSI regulation. Dept.
of Health and Human Services, Social Security Ruling 81-19a (cum.
ed. 1981). Two hypotheticals will illustrate the operation of the
netting regulations. Mr. A, entitled to $100 per month, is
erroneously paid $80 in January and erroneously paid $150 in
February. In March, the Secretary determines that these payments
were incorrect, nets the errors (
i.e., calculates the
difference between the underpayment and the overpayment),
Page 494 U. S. 88
and seeks to recover the net overpayment of $30. Mrs. B, also
entitled to $100 per month, receives $50 in April and $110 in May.
In June, the Secretary makes the incorrect payment determination,
nets the errors, and pays out $40. In neither case may the
beneficiaries seek to have the underpayment and the overpayment
treated separately: Mr. A could not demand $20 for January and seek
a waiver of the recoupment of $50 for February, and Mrs. B could
not demand $50 for April and seek a waiver for the $10 in May.
In the present case, the Secretary made both underpayments and
overpayments to each of the respondents, and netted those errors
pursuant to the regulations. He determined that three respondents
(the original plaintiffs) received net underpayments, and paid that
net amount. The other respondents (intervenors below) received net
overpayments, and the Secretary offered them hearings to determine
whether recoupment should be waived as to the net overpayment. The
plaintiffs (later joined by the intervenors) filed this suit under
§§ 205(g) and 1631(c)(3) of the Act, 42 U.S.C. §§ 405(g),
1383(c)(3) (1982 ed.), in the United States District Court for the
District of Colorado. They claimed that the netting regulations
were facially invalid because (1) they were contrary to the Act and
(2) they violated beneficiaries' rights to procedural due process.
The District Court granted respondents' motion for summary judgment
on the former ground, and the Court of Appeals for the Tenth
Circuit affirmed in all relevant respects. 853 F.2d 1532 (1988).
The court noted that two other Courts of Appeals had upheld the
netting regulations against similar attacks.
Id. at
1536-1537 (citing
Lugo v. Schweicker, 776 F.2d 1143 (CA3
1985), and
Webb v. Bowen, 851 F.2d 190 (CA8 1988)).
We granted certiorari. 490 U.S. 1080.
II
Our mode of reviewing challenges to an agency's interpretation
of its governing statute is well established: we first
Page 494 U. S. 89
ask
"whether Congress has directly spoken to the precise question at
issue. If the intent of Congress is clear, that is the end of the
matter; for the court, as well as the agency, must give effect to
the unambiguously expressed intent of Congress."
Chevron U.S.A. Inc. v.
Natural Resources Defense Council, Inc.,
467 U. S. 837,
467 U. S.
842-843 (1984).
"In ascertaining the plain meaning of the statute, the court
must look to the particular statutory language at issue, as well as
the language and design of the statute as a whole."
K Mart Corp. v. Cartier, Inc., 486 U.
S. 281,
486 U. S. 291
(1988);
see also Mead Corp. v. Tilley, 490 U.
S. 714,
490 U. S.
722-723 (1989). But
"if the statute is silent or ambiguous with respect to the
specific issue, the question for the court is whether the agency's
answer is based on a permissible construction of the statute,"
Chevron, supra, 467 U.S. at
467 U. S. 843,
that is, whether the agency's construction is "rational and
consistent with the statute."
NLRB v. United Food &
Commercial Workers, 484 U. S. 112,
484 U. S. 123
(1987). These principles apply fully to the Secretary's
administration of the Act.
See Schweiker v Gray Panthers,
453 U. S. 34,
453 U. S. 43
(1981);
Batterton v. Francis, 432 U.
S. 416,
432 U. S. 425
(1977).
A
We first consider whether the Act speaks directly to the
validity of the netting regulations. Two provisions are relevant: a
general authorization, and a specific limitation. First, the Act
authorizes the Secretary to determine whether "more or less than
the correct amount" has been paid. 42 U.S.C. §§ 404(a),
1383(b)(1)(A) (1982 ed., Supp. IV). The Act does not define the
term "correct amount." It assuredly could be construed to refer to
the amount properly owing
for a given month. If that were
the only possible interpretation, respondents would prevail, since
the netting regulations ascertain the correct amount for a longer
time period. But the Act does not foreclose a more expansive
interpretation of "correct amount,"
viz., the amount
properly
owing as of the date of the determination.
Although the Act elsewhere describes OASDI and SSI as monthly
benefit programs,
e.g.,
Page 494 U. S. 90
Act § 202(a), 42 U.S.C. § 402(a) (1982 ed., Supp. IV); Act §
1611(c)(1), 42 U.S.C. § 1382(c)(1) (1982 ed., Supp. IV), it nowhere
specifies that the correctness of payments must be determined on a
month-by-month basis.
The fuller context of the OASDI provisions suggests that
Congress, in authorizing the Secretary to determine whether the
"correct amount" was paid, did not prohibit him from making that
determination for more than a monthly time period. The Act
authorizes a determination of whether "the correct amount of
payment has been made," 42 U.S.C. § 404(a)(1), and
mandates adjustments "[w]ith respect to
payment to a
person of more than the correct amount," § 404(a)(1)(A), and
"[w]ith respect to
payment to a person of less than the
correct amount," § 404(a)(1)(B). If Congress had in mind only
shortfalls or excesses in individual monthly payments, rather than
in the overall payment balance, it would have been more natural to
refer to "the correct amount of
any payment," and to
require adjustment "with respect to
any payment . . . of
less [or more] than the correct amount." This terminology is used
elsewhere in § 204(a)(1)(A), whenever individual monthly payments
are at issue ("the Secretary shall decrease any payment under this
subchapter to which such overpaid person is entitled"; "shall
decrease
any payment under this subchapter payable to his
estate"). 42 U.S.C. § 404(a)(1)(A) (emphases added). Moreover, the
provision governing adjustment of overpayments to a deceased
beneficiary seems to contemplate computation on a multi-payment
basis ("the Secretary . . . shall decrease
any payment
under this subchapter payable to his estate or to any other person
on the basis of the wages and self-employment income, which were
the basis
of the payments to such overpaid person")
Ibid. (emphasis added).
The Act's provisions governing SSI are slightly different, but
in no way contradict the Secretary's position. They authorize
Page 494 U. S. 91
the Secretary to determine whether "more or less than the
correct amount of
benefits has been paid," 42 U.S.C. §
1383(b)(1)(A) (1982 ed., Supp. IV) (emphasis added). Had this read
"more or less than the correct amount of
any benefit" it
might support respondents' position, but as written it at least
bears (if it does not indeed favor) the interpretation that more
than a single monthly benefit is at issue.
Respondents nevertheless maintain, as did the Court of Appeals,
that another provision of the Act directly precludes the Secretary
from netting underpayments and overpayments. They point to §
204(b), 42 U.S.C. § 404(b) (1982 ed.), which provides:
"In any case in which more than the correct amount of payment
has been made, there shall be no adjustment of payments to, or
recovery by the United States from, any person who is without fault
if such adjustment or recovery would defeat the purpose of this
subchapter or would be against equity and good conscience."
See also Act § 1631(b)(1)(B), 42 U.S.C. § 1383(b)(1)(B)
(1982 ed., Supp. IV) (SSI). Respondents argue that by using the
phrase "adjustment or recovery," Congress intended to subject to
this requirement all collection methods, including the set off
effected by netting. They claim this broad meaning is given to the
words "adjustment" and "recovery" by other Social Security
regulations (
e.g., 20 CFR §§ 404.502-404.503 (1989)),
common usage (
e.g., Webster's Third New International
Dictionary 27, 1898 (1981) (hereinafter Webster's)), and general
legal usage (
e.g., United States v. Burchard, 125 U.
S. 176 (1888)). Under this interpretation, when the
agency calculates the difference between, or nets, Mr. A's $20
underpayment and his $50 overpayment,
see supra at 963, it
has engaged in "adjustment or recovery," but without complying with
the restrictions on "adjustment or recovery" that the Act
imposes.
In our view, however, with this provision as with those
discussed earlier, respondents have established at most that the
language may bear the interpretation they desire -- not that it
Page 494 U. S. 92
cannot bear the interpretation adopted by the Secretary.
"Adjustment" can have the more limited meaning (which the Secretary
favors) of "an increase or decrease" of payments (Webster's 27),
and "recovery"
can have the more limited meaning of
"get[ting] back" payments already made (
see id., at 1898
("recover")). Moreover, other provisions of the Act support this
limited meaning. It is at least reasonable, if not necessary, to
read the phrase "adjustment or recovery" in § 204(b)
in pari
materia with the identical phrase in § 204(a)(1). The latter
section directs the Secretary, if he finds that incorrect payment
has been made, to make "proper adjustment or recovery . . .
as
follows." In the case of overpayment, he shall
"decrease any payment under this subchapter to which such
overpaid person is entitled, or shall require such overpaid person
or his estate to refund the amount in excess of the correct amount.
. . ."
42 U.S.C. § 404(a)(1)(A) (1982 ed., Supp. IV). As to SSI,
"adjustment or recovery shall . . . be made by appropriate
adjustments in future payments to such individual or by recovery
from . . . or by payment to such individual or his eligible spouse.
. . ."
42 U.S.C. § 1383(b)(1)(A) (1982 ed., Supp. IV). Giving the terms
their more limited meaning does not produce absurd policy
consequences. Reducing future benefits, or requiring the
beneficiary to pay over cash, will ordinarily produce more hardship
than merely setting off past underpayments and overpayments. It is
not at all unreasonable to think that waiver hearings were
established only for the former.
As used in the Act, therefore, adjustment can be read to mean
decreasing future payments, and recovery to mean obtaining a refund
from the beneficiary. Under this interpretation, when the agency
nets Mr. A's underpayment against his overpayment, it is not
engaged in "adjustment or recovery," but only in the calculation of
whether "more or less than the correct amount of payment has been
made." Only
after making that calculation does the
Secretary take the additional step of rectifying any error by
"adjustment" (increasing
Page 494 U. S. 93
or decreasing future payments) or "recovery" (obtaining a refund
from the beneficiary). And it is only this latter step that is
governed by § 204(b) of the Act. We do not say this is an
inevitable interpretation of the statute, but it is assuredly a
permissible one.
B
Since the Act reasonably bears the Secretary's interpretation
that netting is permitted, only one issue remains: Respondents
contend that the manner in which the regulations provide for
netting to be conducted is arbitrary and capricious, because of
their definition of the netting period. Overpayments are netted
with underpayments up to the "month [of] the initial determination"
of error. 20 CFR § 416.538 (1989). "Initial determination" is a
term of art meaning the Secretary's formal determination that an
error was committed.
See 20 CFR §§ 404.902, 416.1402
(1989). Needless to say, that formal determination will not be
simultaneous with the Secretary's first discovery that something is
amiss; delay is inevitable. Respondents contend that this delay is
fatal. At best, they say, the period over which netting is
conducted will turn on the fortuity of the time period between
discovery and formal determination. At worst, the Secretary will
manipulate the netting period by delaying formal determination,
thus including more underpayments in the netting period and
reducing the net overpayment subject to the recoupment-waiver
procedures.
It seems to us not arbitrary or capricious to establish a grace
period within which these determinations can be considered and
formally made; they should not be spur-of-the-moment decisions.
That delay will extend the netting period, and may result in the
inclusion of more underpayments to be netted. But we cannot say
that the alternatives -- immediate determinations, or
determinations within a fixed period -- would not produce errors
that make beneficiaries worse off on the whole.
Page 494 U. S. 94
Moreover, although the Secretary's regulations do not establish
a fixed time period for the formal determination, they do establish
a time limit upon the principal adverse consequence of delay: the
netting-in of additional underpayments. The regulations
provide:
"Where an apparent overpayment has been detected but
determination of the overpayment has not been made (
see §
416.558(a)), a determination and payment of an underpayment which
is otherwise due cannot be delayed unless a determination with
respect to the apparent overpayment can be made before the close of
the month following the month in which the underpaid amount was
discovered."
20 CFR § 416.538 (1989).
See also HHS, Program
Operation Manual System, GN 02201.002 (1989) (Social Security
Administration policy to resolve overpayments as quickly as
possible). Respondents' fear of intentional manipulation of the
netting period can be entirely dismissed if this provision is
observed in good faith -- as we must presume, in this facial
challenge, it will be.
See, e.g., FCC v. Schreiber,
381 U. S. 279,
381 U. S. 296
(1965). The intentional manipulation hypothesis is in any event
implausible. Deliberately protracting the netting period may indeed
draw in future underpayments; but it may just as likely draw in
future overpayments, which will be uncollectible until the
Secretary's determination is made. The Secretary might conceivably
ensure that delay works to the Government's financial advantage by
deliberately underpaying while keeping the netting period
open, but since that is an obvious violation of the Act, it is
again not the stuff of which a facial challenge can be
constructed.
In addition to the fact that the disadvantages of the
Secretary's approach are less than respondents assert, the
disadvantages of respondents' approach are more. The Secretary
points out that a separate accounting for each month would cause
the agency great expense, in the cost of a greatly increased
Page 494 U. S. 95
volume of complex recoupment-waiver proceedings, in the cost of
overpayments that are simply written off because the cost of the
proceedings would exceed the recovery, and in the cost of
overpayments whose return will be subject to lengthy delays. These
expenses "in the end come out of the pockets of the deserving since
resources available for any particular program of social welfare
are not unlimited."
Mathews v. Eldridge, 424 U.
S. 319,
424 U. S. 348
(1976).
Respondents seek to minimize the administrative burden by
proposing a scheme under which the Secretary would notify the
beneficiary of underpayments and overpayments, withhold
reimbursement of the underpayments for a brief period during which
the beneficiary may seek waiver of recoupment of overpayments, and
then net the underpayments and that portion of the overpayments as
to which waiver has not been sought. This scheme, however, does not
at all address the problem of delay in netting that is the asserted
basis for finding the regulations arbitrary and capricious.
Substituting "notification" of underpayments and overpayments for
"determination" of underpayments and overpayments merely gives the
occasion for the delay another name. What this alternative proposal
of respondents really puts forward is an alternative means of
assuring that overpayments cannot be "netted out" without an
opportunity for waiver hearing. As we discussed at length earlier,
the statute does not require such assurance. In sum, we find no
basis for holding the regulations arbitrary and capricious.
* * * *
The Court of Appeals did not reach respondents' contention that
the regulations violate due process, and we will not address that
claim in the first instance.
See, e.g., United States v. Sperry
Corp., 493 U. S. 52,
493 U. S. 66
(1989). Accordingly, the judgment is reversed and the case remanded
for further proceedings consistent with this opinion.
It is so ordered.
Page 494 U. S. 96
**
"(A) Whenever the Secretary finds that more or less than the
correct amount of benefits has been paid with respect to any
individual, proper adjustment or recovery shall, subject to the
succeeding provisions of this subsection, be made by appropriate
adjustments in future payments to such individual or by recovery
from such individual or his eligible spouse (or from the estate of
either) or by payment to such individual or his eligible spouse. .
. ."
"
* * * *"
"(B) The Secretary (i) shall make such provision as he finds
appropriate in the case of payment of more than the correct amount
of benefits with respect to an individual with a view to avoiding
penalizing such individual or his eligible spouse who was without
fault in connection with the overpayment, if adjustment or recovery
on account of such overpayment in such case would defeat the
purposes of this subchapter, or be against equity and good
conscience, or (because of the small amount involved) impede
efficient or effective administration of this subchapter. . .
."
Act § 1631(b)(1)(A), (B); 42 U.S.C. § 1383(b)(1)(A), (B) (1982
ed., Supp. IV).
Justice STEVENS, with whom Justice BRENNAN, Justice MARSHALL,
and Justice KENNEDY join, dissenting.
The kingly power to rewrite history has not been delegated to
the Secretary of Health and Human Services. Nevertheless, the
Secretary now claims authority to determine that no underpayment
has been made to a beneficiary who concededly received a deficient
monthly payment. The majority accepts this argument. Because I
believe this result inconsistent with both common sense and the
plain terms of the statute, I respectfully dissent.
The Social Security Act (Act), 42 U.S.C. § 401
et seq.
(1982 ed. and Supp. IV), establishes the Old-Age, Survivors and
Disability Insurance program (OASDI) and the Supplemental Security
Income program (SSI). By enacting this legislation, Congress
authorized the Secretary to make monthly payments to literally
millions of elderly and needy beneficiaries. Anticipating that
there will inevitably be many occasions on which such a payment is
more or less than the correct amount, Congress directed the
Secretary to prescribe regulations outlining the procedure for
remedying overpayments and underpayments.
In the vast majority of cases, these procedures are
uncontroverted. We deal today only with a narrow category of
disputed cases in which claimants assert rights designed to protect
specially disadvantaged beneficiaries. Respondents, like the
plaintiffs in
Califano v. Yamasaki, 442 U.
S. 682 (1979), wish to compel the Secretary to waive his
claim for recoupment of an overpayment.
See 42 U.S.C. §
404(b) (1982 ed.) (§ 204(b) of the Act) and 42 U.S.C. §
1383(b)(1)(B)(i) (1982 ed., Supp. IV) (§ 1631(b)(1)(B)(i) of the
Act) (requiring waiver by the Secretary under certain
circumstances). The Secretary protests that allowing these waivers
would burden the benefits program with "great expense" and a
"greatly increased volume of complex . . . procedures."
Ante at
494 U. S. 94.
The Secretary's fears are, of course, irrelevant if the statute
commands him to honor respondents'
Page 494 U. S. 97
waiver requests. Moreover, we noted in
Yamasaki that in
1977 the average overpayment to OASDI beneficiaries exceeded $500,
but that only 3.4 percent of the overpaid persons requested that
the Secretary waive recoupment. 442 U.S. at
442 U. S. 686,
n. 2. Thus, although § 204(b) applies as a legal matter to all
OASDI cases in which "more than the correct amount of payment has
been made," our decision today applies as a practical matter only
to about 31/2 percent of OASDI overpayments. Even this category
encompasses overpayments not implicated by respondents' complaint,
however. The present controversy affects only those cases in which
the Secretary attempts to recoup an overpayment by netting it
together with an underpayment,
and in which the
beneficiary seeks a waiver. We address, in short, the claims of a
subset of the minority of overpaid beneficiaries who seek waivers.
[
Footnote 1]
With respect to these beneficiaries, as in all other cases
involving overpayments, Congress has given the Secretary explicit
mandatory instructions. Those instructions require him to recognize
that any case in which "more than the correct amount of payment has
been made" involves a factual event that cannot be ignored. The
Secretary cannot erase the historical record or pretend that the
overpayment never occurred simply because later events alter the
significance of earlier ones.
This is what the statutory command says about OASDI
overpayments: [
Footnote 2]
Page 494 U. S. 98
"In any case in which more than the correct amount of payment
has been made, there shall be no adjustment of payments to, or
recovery by the United States from, any person who is without fault
if such adjustment or recovery would defeat the purpose of this
subchapter or would be against equity and good conscience."
§ 204(b) of the Act; 42 U.S.C. § 404(b). We have previously
recognized that this provision "concerning the fact of the
overpayment" speaks in "the imperative voice" and requires that
"
there shall be no adjustment of payments to, or recovery by
the United States from, any person' who qualifies for waiver."
Califano v. Yamasaki, 442 U.S. at 442 U. S.
693-694.
As the Court of Appeals for the Tenth Circuit observed, by this
provision and its SSI counterpart the "statute makes a clear
differentiation" between overpayments and underpayments.
Everhart v. Bowen, 853 F.2d 1532, 1537 (1988).
"While the provisions relating to underpayments mandate payment
without qualification, the recovery of overpayment provisions are
qualified by the waiver of recoupment procedures."
Ibid. The reason for this distinction is easily
surmised. A needy person who unknowingly receives an overpayment
may spend it, not realizing that the Government will later take
back money by reducing needed benefits, or by refusing to
compensate for a prior underpayment. The beneficiary may be left
without money essential to pay monthly bills. Thus, as Judge
Gibbons has observed, the
"difference in treatment of overpayments and underpayments . . .
is quite consistent with the fundamental policy
Page 494 U. S. 99
motivating Congress in enacting both Titles; namely assuring
those most in need in our society that they will receive a monthly
benefit which will from month to month provide for the necessities
of life."
Lugo v. Schweiker, 776 F.2d 1143, 1154 (CA3 1985)
(dissenting opinion). The procedures at issue here, however, "treat
overpayments and underpayments equally,"
Everhart, 853
F.2d at 1537, thereby deviating from both the letter and the
purpose of the statutory command.
If we use two typical cases involving a $500 overpayment as
examples, we can readily see how the Secretary's "netting
regulations" violate the statutory command. In the first example,
we may assume that the $500 overpayment was made in 1978 and first
discovered in 1988. If we further assume that the beneficiary was
without fault and that it would have been against equity and good
conscience to recoup that amount from him in 1988, it necessarily
follows that he had a statutory right to a waiver of any such
recoupment. In our second hypothetical example, we may assume the
same facts with the addition that in 1988 the beneficiary's monthly
checks were erroneously reduced by $250 for each of two months.
Under the Secretary's reading of the statute, the beneficiary's
request for payment of the balance of the amount due for those two
months could be denied on the ground that neither more nor less
than the correct amount of payment had been made during the period
between 1978 and 1988.
In my view, such a reading of the statute is intolerable. The
assumption that an underpayment in 1988 -- whether negligent or
deliberate -- could extinguish a needy beneficiary's statutory
right to request a waiver of recoupment of an overpayment that
occurred years earlier is flatly inconsistent with the statutory
command that "equity and good conscience" should determine the
waiver issue. For the Secretary to pretend that neither more nor
less than the correct amount had been paid -- when there was not
only a series of
Page 494 U. S. 100
incorrect monthly payments in 1978 but also a pair of incorrect
payments in 1988 -- is nothing short of rewriting history to
destroy a citizen's valuable statutory right.
In light of the statistics quoted in
Yamasaki, 442 U.S.
at
442 U. S. 686,
n. 2, we might expect that the Secretary's refusal to recognize
waiver requests would injure beneficiaries in less than 4 percent
of the netting cases. The illustrative hypotheticals propounded by
the majority, which suppose an underpayment and overpayment in
quick succession during a 2-month period,
ante at
494 U. S.
87-88, are most likely typical of the cases in which a
beneficiary would elect not to request any waiver. Yet, as Congress
foresaw, recoupment of other overpayments may entail much more
serious difficulties for the statutory beneficiaries. The
Secretary's "netting regulations" cover brief 2-month
discrepancies, like the examples invented by the majority, but the
regulations also authorize netting over multi-year periods, as was
done with respect to the actual respondents in this case. The
regulations may thus provide a form of rough justice in 97 percent
of the netting cases, but that ratio in no way excuses the
injustice that is apparent in true hardship cases. Those cases are
few in comparison to the total volume handled by the Secretary.
They are, however, of crucial importance to the beneficiaries.
For some beneficiaries the amount at stake is substantial, and
the reasons why Congress commanded the Secretary to carefully
consider the equities of the particular case are overwhelmingly
apparent. Thus, for example, respondent Emil Zwiezen and his wife
are both dependent on their monthly Social Security checks of $911.
According to the Secretary, Mr. Zwiezen received $9,483 in
overpayments between 1978 and 1981. The Secretary, however, failed
to give Mr. Zwiezen certain increases in his monthly benefit amount
to which he was entitled and, by April 1984, he had accumulated
underpayments of $4,376. Although he ultimately received a waiver
of the net overpayment remaining after the Secretary subtracted the
underpayments, Mr. Zwiezen never had
Page 494 U. S. 101
an opportunity to obtain a waiver of the entire overpayment, and
thus could not recover any portion of the increases that had been
denied to him. According to his affidavit, the resulting shortfall
caused this elderly couple to suffer severe emotional and financial
consequences. Mr. Zwiezen could not pay his water bills, had fallen
behind in his house payments, and feared that his doctor and
druggist would stop providing him medical care. Affidavit of Emil
Zwiezen, reproduced in Brief for Appellee in No. 87-1839 (CA10), p.
31A.
See also Everhart v. Bowen, 694 F.
Supp. 1518, 1519-1520 (Colo. 1988).
The validity of the netting regulations that enabled the
Secretary to recover $4,376 from Mr. Zwiezen without giving him the
notice and opportunity to request a waiver required by § 204(b)
depends on a highly unnatural reading of three statutory
provisions. First, the Secretary assumes that no overpayment or
underpayment can actually occur until he finds that it has
occurred. This assumption is not only foreclosed by the plain
language of § 204(b) and § 1383(b)(1)(B)(i), [
Footnote 3] but also perversely converts a duty to
find the facts into a power to change them.
Second, the Secretary assumes that the words "adjustment" and
"recovery" in the two prohibitions against inequitable recoupment
of overpayments do not apply to either a deliberate or an
inadvertent decrease in monthly payments unless the Secretary has
previously made a formal finding that an overpayment occurred. As a
practical matter, this means that either a simple mistake or a
deliberate effort to
Page 494 U. S. 102
await underpayments before recognizing overpayments can effect
the same adjustment or recovery that the statute expressly
prohibits. [
Footnote 4] But
"[n]o recovery means no recovery by setoff, and no recovery by
suit; no recovery at all."
Lugo v. Schweiker, 776 F.2d at
1154 (Gibbons, J., dissenting). The
"netting regulations permit the Secretary to accomplish what the
waiver provisions plainly and unequivocally forbid; namely a
recovery by the United States of overpayments without a hearing on
waiver."
Id. at 1155 (footnote omitted). In my opinion the words
"adjustment" and "recovery" are not such chameleons.
Finally, in a statutory scheme that is replete with references
to monthly payments and monthly benefits, [
Footnote 5] the Secretary assumes that the word
"payment" as used in § 204(a), § 204(b), and § 1631(b)(1)(B)(i),
and the word "benefits" as used in § 1631(b)(1)(A), refer to the
aggregate amount of numerous payments that may have been made over
a period of several years. Indeed, the relevant payment period --
instead of the month in which more or less than the correct amount
of payment has been made -- is in the Secretary's eyes an
accordian-like concept that may be expanded to encompass
overpayments that occurred in the past or underpayments that are
ongoing.
"The key to the netting regulations is the Secretary's
completely artificial definition of the period for calculation of
overpayments and underpayments."
Lugo, 776 F.2d at 1155 (dissenting opinion).
Page 494 U. S. 103
The net effect of these distortions of statutory language is to
defeat clear congressional intent. The Secretary contends that we
must nevertheless defer to his interpretation of the statute.
Relying heavily upon
Chevron U.S.A. Inc. v.
Natural Resources Defense Council, Inc.,
467 U. S. 837
(1984), the Secretary would have us believe that his responsibility
to construe ambiguous provisions in the statutes he administers
confers upon him authority to define away overpayments and
underpayments when a program participant has received both. The
majority accepts this suggestion. But
Chevron and its
progeny yield the Secretary no such privilege. Because the
"judiciary is the final authority on issues of statutory
construction and must reject administrative constructions which are
contrary to clear congressional intent,"
we defer to the administrator's interpretation of a statute only
after "employing traditional tools of statutory construction." 467
U.S. at
467 U. S. 843,
n. 9. We have accordingly not hesitated to find that "agency
interpretations must fall to the extent they conflict with
statutory language."
Public Employees Retirement System of Ohio
v. Betts, 492 U. S. 158,
492 U. S. 171
(1989).
See also Dole v. United Steelworkers, ante, p.
494 U. S. 26;
INS v. Cardoza-Fonseca, 480 U. S. 421,
480 U. S.
445-450 (1987).
Indeed,
Califano v. Yamasaki, 442 U.
S. 682, in which we first recognized the hearing right
the Secretary has denied to these respondents, itself rejected the
Secretary's reading of this statute. Although the statute does not
state by express terms that a hearing is essential before the
Secretary makes a § 204(b) waiver decision, we nevertheless found
it clear in
Yamasaki that Congress intended that a hearing
be held. We analyzed the statute and concluded that "the nature of
the statutory standards makes a hearing essential." 442 U.S. at
442 U. S. 693.
The import of the statutory terms in this case is, I believe,
equally clear. [
Footnote 6]
Page 494 U. S. 104
The majority, however, refuses to heed the direction of those
standards. In so doing, the majority makes much of its conclusion
that, had Congress wished to prohibit netting, "it would have been
more natural" for Congress to phrase its command in terms of "any
payment."
Ante at
494 U. S. 90. Perhaps that is so. [
Footnote 7] But it is entirely possible that
Congress clearly
Page 494 U. S. 105
intended to prohibit any netting that diminishes waiver rights,
but nonetheless did not have the netting problem in mind when
drafting language relevant to overpayments and
Page 494 U. S. 106
underpayments. The netting procedure here is so inconsistent
with the mandatory character of the waiver provision, [
Footnote 8] with the statutory terms
discussed above, and with the statute's reference to "equity and
good conscience," that Congress might simply have thought it
unnecessary to add further language ruling out specifically any
such program. In any event, the majority's argument is irrelevant.
[
Footnote 9] Just as we do not
sit to supply statutory directives where Congress gave none, we
likewise do not sit to insist that Congress express its intent as
precisely as would be possible. Our duty is to ask what Congress
intended, and not to assay whether Congress might have stated that
intent more naturally, more artfully, or more pithily.
In this case, it is clear beyond peradventure that Congress
intended to ensure that needy citizens would receive their full
monthly benefit checks, even if that policy sometimes means
foregoing any opportunity the government might have to recoup an
earlier overpayment. The Secretary's reading of the statute puts an
unreasonable strain upon both its words and its purpose. If context
were ignored entirely, I suppose that a student of language could
justify the Secretary's interpretation of "adjustment," "payment,"
and his duty to find historical facts. Perhaps that is what the
majority means when it says that the statutory language
"reasonably
Page 494 U. S. 107
bears",
ante at
494 U. S. 93,
the Secretary's argument. But I find it inconceivable that wise
judges can conclude that regulations in which the Secretary
delegates to himself the power to rewrite history are "based on a
permissible construction of the statute."
Chevron U.S.A. Inc.
v. Natural Resources Defense Council, Inc., 467 U.S. at
476 U. S.
843.
I respectfully dissent.
[
Footnote 1]
The Secretary's argument becomes especially weak if this subset
is very large. If the Secretary can evade the waiver provisions by
netting overpayments against underpayments, and if netting is
possible in most cases, then the Secretary's procedures would
effectively nullify the waiver provisions. Such a consequence would
be strong evidence that the Secretary's procedures are inconsistent
with the statute.
See, e.g., Colautti v. Franklin,
439 U. S. 379,
439 U. S. 392
(1979) (it is an "elementary canon of construction that a statute
should be interpreted so as not to render one part
inoperative").
[
Footnote 2]
SSI overpayments subject the Secretary to a similar command.
Section 1631(b)(1)(B)(i) of the Act, 42 U.S.C. § 1383(b)(1)(B)(i)
(1982 ed., Supp. IV), reads:
"The Secretary shall make such provision as he finds appropriate
in the case of payment of more than the correct amount of benefits
with respect to an individual with a view to avoiding penalizing
such individual or his eligible spouse who was without fault in
connection with the overpayment, if adjustment or recovery on
account of such overpayment in such case would defeat the purposes
of this subchapter, or be against equity and good conscience, or
(because of the small amount involved) impede efficient
administration of this subchapter."
[
Footnote 3]
The OASDI provision reads: "In any case in which more than the
correct amount of payment has been made, there shall be no
adjustment. . . ." 42 U.S.C. § 404(b) (1982 ed.). Notably, the
section does not refer to "any case in which the
Secretary
finds that more than the correct amount of payment has been
made. . . ."
Likewise, 42 U.S.C. § 1383(b)(1)(B)(i) (1982 ed., Supp. IV),
applies "in the case of payment of more than the correct amount of
benefits . . . ," not merely "in the case that the Secretary finds
payment of more than the correct amount of benefits."
[
Footnote 4]
The majority speculates that
"[d]eliberately protracting the netting period may indeed draw
in future underpayments; but it may just as likely draw in future
overpayments, which will be uncollectible until the Secretary's
determination is made."
Ante at
494 U. S. 94.
This proposition depends, of course, upon the relative frequency of
overpayments and underpayments. The majority assumes that the two
occur with equal frequency, an assumption for which it offers no
support. One might indeed make precisely the opposite assumption:
that the Government errs in its own favor more often, and more
substantially, than it errs in favor of beneficiaries.
[
Footnote 5]
See, e.g., 42 U.S.C. § 402(a), § 402(j) (1982 and Supp.
IV); 42 U.S.C. § 1382(c)(1) (1982 ed., Supp. IV).
[
Footnote 6]
It is, of course, of no importance that
Yamasaki
predates
Chevron U.S.A. Inc. v.
Natural Resources Defense Council, Inc.,
467 U. S. 837
(1984). As we made clear in
Chevron, the interpretive
maxims summarized therein were "well-settled principles." 467 U.S.
at
467 U. S.
845.
[
Footnote 7]
Even this much is far from clear. The majority's suggestion is
that Congress could have referred to individual monthly payments,
rather than a net transfer, by using the phrase "any payment,"
rather than simply "payment," in, for example, 42 U.S.C. § 404(b)
(1982 ed.). The provision reads in relevant part, "In any case in
which more than the correct amount of payment has been made. . . .
"
For reasons already stated, I do not believe that this provision
is ambiguous. But if it were, the majority's suggestion would not
dispell entirely the interpretive difficulties that trouble the
majority. The word "payment" embraces two concepts: that of a
wealth transfer, and that of a transaction used to effect such a
transfer. For this reason, it is possible for a lender to tell a
borrower that "a series of 15
payments will be needed to
effect
payment of the debt." By using the plural form of
"payment," the lender focuses attention upon several transactions,
rather than the transfer accomplished by the transactions together.
And, indeed, careful examination of the statute, the majority
opinion, and this dissent will show that all three frequently
distinguish transactions from transfer by invoking the plural,
"payments."
The majority wisely declines to suggest that Congress should
have used the plural in § 404(b) to prohibit netting. That option
was not available for two reasons. First, we are imagining how
Congress might redraft the section to refer more specifically to a
single defective
payment, and
not to multiple
payments. Had Congress referred to the "correct amount of
payments," readers would have believed that Congress was
referring, albeit awkwardly, to the
number of
transactions, rather than to the amount of an individual
transaction. Second, although we are assuming that Congress does
not wish to refer to the
comprehensive transfer effected
by multiple payments together, Congress must refer to the
subsidiary transfer accomplished by the transaction in
question: it is precisely the abnormality of that transfer which
makes the transaction of interest. We are dealing, in short, with a
payment of improper payment.
As already noted, the majority proposes to solve this problem by
inserting the word "any" before "payment." But the adjective begs
the question. "Any payment" may differ from "payment" not by
distinguishing a single transaction or transfer from the aggregate
of all such transfers, but rather by distinguishing all possible
such aggregate transfers from some paradigmatic group of aggregate
transfers. The word "any" arguably makes the subsection applicable
to any and all possible payments. In other words, the introductory
clause to the redrafted version of § 404(b) would include the word
"any" twice -- "In
any case in which more than the correct
amount of
any payment has been made . . ." -- but the
majority and the Secretary could continue to make in the face of
two "anys" the argument they now make in the face of one. The
second "any" would rule out exceptions to the general rule without
explaining whether the general rule applied to transfers or
transactions: the revised statute might be read to mean that the
Secretary must provide for waiver by any and all beneficiaries of
any and all net overpayments. This may not be the most obvious
interpretation, but, to use the majority's own phrase, the proposed
language "reasonably bears" this interpretation.
Ante at
494 U. S. 93.
Accordingly, the majority would apparently have to permit netting
by the Secretary even if confronted by its own proposed clear
expression of congressional intent to prohibit netting.
The Congress which the majority imagines would thus have to
search for other means to express its intent. One possible attempt
is actually in the statute. Congress uses the awkward phrase,
"correct amount of payment has been made." The educated layman may
cringe on hearing this legalism; "correct amount has been paid"
seems to say as much and more crisply. Why add the bulky, "of
payment"? It is at least possible that Congress hoped to focus
attention on individual payments: the "of payment" reminds the
reader that "amounts" due are not simply due in total, but due in
regular installments -- denominated "payments." This point is
obviously not dispositive, but it is more plausible than the
majority's discussion of "any payment."
Of course, Congress could have obviated the need for any such
analysis by inserting into the statute a reference to payments in
individual months, or simply by saying, "The Secretary shall not
net underpayments and overpayments." My point is not that a more
precise statute is impossible, however; my point is only that the
interpretive difficulties posed by the statute cannot reasonably be
ascribed to a conscious delegation, to the absence of intent, or to
inability to forge a coalition.
See Chevron, 467 U.S. at
467 U. S. 865.
Rather, the interpretive problems pending before us result from an
imprecision inherent in the concept of payment. That sort of
imprecision is inevitable in political language.
See
Federalist No. 37, p. 230 (E. Earle ed. 1937) J. Madison (on the
nature of imprecision in political concepts).
[
Footnote 8]
See Yamasaki, 442 U.S. at
442 U. S.
693-695.
[
Footnote 9]
In
Yamasaki, for example, we interpreted the statute to
confer a hearing right, even though Congress never used the word,
"hearing." One might argue that, if Congress wished to establish a
hearing right, "it would be more natural" for Congress to draft a
statute that mentioned hearings expressly. The
Yamasaki
Court supplied the proper answer to this objection: whether or not
reference to hearings would be more natural, it is unnecessary,
since the hearing right inheres in "the nature of the statutory
standards." 442 U.S. at
442 U. S.
693.